Industry – Page 56 – Swanson Reed | Specialist R&D Tax Advisors

Clean Energy R&D Could Be the Solution to Climate Change

Research and Development is the unsung hero when it comes to American innovation. Decades ago, unemployment and lack of sufficient industries were the biggest challenges in America, but Government funded Research and Development (R&D) innovations took care of all of that. Today, we have a different challenge: climate change.

But the good news is that R&D can help take care of that too, through clean energy R&D policies. In fact, clean energy R&D policies are already making a difference in the realm of climate change.

Did you know that clean energy is cheaper today compared to any other time in history? And that is a direct result of scientific innovations that were made possible by R&D investments made 10, 15, 20, and even 30 years ago.

Even though this improvement is nowhere close to goals we would like to attain in the long term, it is significant progress we should definitely include in the “win” column.

That said, we cannot fully take control over climate change only using the technology we have today.

“Clean Energy R&D innovation is the ultimate solution to the surging threat in climate change. All nations around the world do not have the luxury to sit around and wait for the next cutting edge technological inventions to emerge so they can start taking action,” said Ernest Moniz, Secretary of the Department of Energy.

This means governments need to make serious investments in clean energy R&D right away.

On the bright side, clean energy R&D that has already had an impact is Solar Photovoltaics. These devices were invented back in the 1950s, but they were too expensive to be adopted for commercial and non-commercial use back then.

However, thanks to recent, multiple R&D breakthroughs, the market cost of these devices dropped from $76.67 in 1977 to $0.26 in 2016. This marks a decrease of more than 99% in 39 years.

This astounding price decrease accelerated deployment, opening the doors wide open for the solar sector: which, in turn, encouraged private investments in the clean energy economy.

To meet the challenges of climate change wholly, we need more R&D victories like these.

Australia’s Attractiveness for Clinical Trials

To bring a new drug to market, an average of 12 years and $1.7 billion (US) in R&D spending is required. Yet only 1 in 5,000 drugs that begin preclinical testing make it to the market. This has led to a disproportionate number of drugs being developed for rare diseases (affecting less than 200,000 in the US at any given time) due to a 25.3% success rate versus 3.4% for oncology. Many argue this is unsustainable and there is pressure to shorten the amount of time it takes to develop drugs.

Over 50% of global clinical trials have treatment sites in the Asia-Pacific region due to the huge number and diversity of participants available (over four billion). Australia is particularly attractive, with over $1 billion AUD invested in R&D each year across more than 1,500 trials. From 2012-2015, clinical trial activity rose by 17.2% compared to 1.8% globally. Australia’s top-notch facilities and quality of medical research are key draw points for pharmaceutical companies.

The refundable R&D tax incentive encourages clinical trial development in Australia, with early phase (I/II and III) often considered core activities. International companies can access the incentive, as the company is necessarily required to be a resident or hold I.P. in Australia. Ultimately, the R&D tax incentive can significantly lower the cost of R&D for global pharmaceutical companies.

*Note this is general information only, and companies should seek specific advice with respect to the eligibility, entitlements on obligations of registering their R&D Activities. More info is available on the websites of the Australian Government Agency Regulators:

China’s Great Leap Forward in Research and Development

According to a report released by the U.S. National Science Board (NSB), the United States is still leading in the world in gross domestic expenditure on Research and Development (R&D). However, the nation’s global share of R&D has been decreasing over the last 15 years, whereas China’s share has been increasing steadily over the last 25 years.

According to the NBS report, China’s R&D spending skyrocketed by approximately 20.3% per annum between 1992 and 2017, with the nation’s expenditure amount for 2017 reaching a whopping $254 billion (about 1.76 trillion Yuan).

The figure marks a year on year increase of 12.3%, as the nation pursues a development strategy through technological and scientific progress. That figure is also 123 times the amount China spent on R&D in 1991.

“The year-to-year growth in R&D spending indicates firm governmental and social support for making China a scientific power,” said Xie Xuemei, a specialist in innovation economics at Shanghai University in China.

One of the main reasons China’s R&D spending is surging so rapidly is that the nation is trying to gain a competitive advantage over other nations in emerging industries.

According to a different report by the Organization for Economic Cooperation and Development, the biggest source of China’s R&D funding is its business sector; which mirrors the financing trend of advanced economies.

The nation’s business enterprise sector coughed up approximately 76% of the total R&D expenditure in 2017, up from 2000’s 57% contribution. In the United States, the business sector contributed 62% of the total R&D expenditure in 2017, while Japan businesses funded 78%.

That said, the business sector is not the only factor contributing to the nation’s surge in R&D expenditure. The figures were also partly propelled by set government measures. According to the 13th Five Year Plan (2015-2020), China set a goal of hitting an R&D spending –to–GDP ratio of 2.5 percent by 2020.

It also vowed to implement strategies and build up core technologies that push for innovation-driven developments. If everything goes as planned, that will bring China in a head-to-head competition against the United States, which is the current main exporter of technology-intensive products.

Mercury Marine Scoops the “Wisconsin Manufacturer of the Year” Award

They are the Oscars of the manufacturing industry. The Wisconsin Manufacturer of the Year Awards Ceremony was held on February 21, 2019, at the Pfister Hotel in Milwaukee, and Mercury Marine (the world leader in marine propulsion and technology) was awarded as 2019’s Wisconsin Manufacturer of the Year in the Mega category.

This is the third time Mercury Marine (which is also the largest division of Brunswick Corporation) has won the prestigious award: first in 2006 then again in 2014. It also so happens that the Fond du Lac-based firm is celebrating its 80th anniversary in 2019.

For those not acquainted with the awards, they are presented once a year by Wisconsin Manufacturers and Commerce (WMC) to companies based in the state. All nominees of the awards should be firms that produce world-class products and create employment for people in communities where they (the companies) are located.

“We are honored to win the Wisconsin Manufacturer of the Year Award for the third time,” said John Pfeifer, the President of Mercury Marine. “We have invested more than $1 billion in expansion and R&D over the past 10 years and in 2018, we had the largest product launch in the history of our company,” he added.

Below is an enumeration of milestones Mercury Marine achieved in 2018.

Broke ground on completing a $10 million expansion project that added a 20,000 square feet research facility to the 2.5 million square foot campus. The firm also made major upgrades to its other facilities.
Had the largest, major new-product rollout in the company’s history. The rollout included 19 new V-6 and V-8 outboard engines and 7 other new engines. Better yet, on average, Marine Mercury has released a major product every six weeks for the last six years, allowing it to set the pace for marine innovation.
Workforce expanded by 12 percent to support increased production. The firm experienced an unmatched product demand response in 2018.
Adopted state-of-the-art, automated manufacturing equipment. These already-installed and implemented gadgets are highly effective compared to the previous equipment the company was using.
Also had to adopt new manufacturing practices and adapt them to higher output when demand skyrocketed beyond their expectations.

“Although Mercury has unveiled many new innovations and has amassed many successes through the years, 2018 stands out as a particularly remarkable year of achievements that will help to shape the future of both Mercury Marine and the entire boating industry and it is gratifying to be recognized for this honor by the WMC,” Pfeifer wrote in a statement after winning the award.

As a show of appreciation, the company has decided to celebrate its 80th anniversary throughout the year with its customers and employees.

Chicago and Indiana Among the Fastest Growing Life Sciences Clusters

In an industrial sector defined mostly by innovation, life sciences research remains a high expense, high-risk scheme – and having a great location strategy is a vital success factor.

According to Deloitte’s 2019 Global Life Sciences Outlook, rising research and development (R&D) costs, operating costs, competitive wages for top talents, and skyrocketing lab rent payment in top tier clusters are driving life science firms to newfangled and creative real estate strategies so they can remain near resources and top talent.

Competitive and expensive real estate markets are forcing life sciences firms to think twice when assessing their real estate preferences. For the most highly in-demand locations, fierce competition for talent and space is resulting in both creative renovations and new development of first generation space.

But not every need for life sciences laboratory space can be met in larger and more established clusters such as San Diego, Boston-Cambridge, or Raleigh Durham. As these cities face a scarcity of laboratory space and other life sciences real estate, companies looking for alternative options are discovering second-rank markets such as Chicago, Indiana, Seattle, and Denver. Even though established United States clusters are located on either coast, emerging clusters are showing that life science companies are growing and taking root in the middle of the nation.

Midwest cities such as Indiana are showing sufficient growth to rank as emerging clusters. Indiana’s pharmaceutical and medical device industries have shown steady growth since 2014 and was ranked in the top 10 states for bio-science patent distributions in 2016. According to TEConomy 2018 research on Investment, Innovation, and Job Creation in the Bioscience Industry, Indiana boasted the highest location quotient for drugs and pharmaceuticals compared to all other US states. This implies there is a high employment concentration in the industry in this city relative to the rest of the nation.

Illinois, chiefly the Chicago region, is now home to several top research institutions and universities, and also boasts the headquarters of big firms such as Hospira, Baxter International and Abbot Laboratories.

The Windy City also received favorable attention in February 2018 when CBRE (the commercial real estate giant) pointed out the city’s emergence as a noteworthy life sciences cluster. And even though the region ranks tenth in NIH funding with awards totaling around $688.2 million, it placed ninth in lab space (8.8 million square feet), patents (1246), and VC funding ($332.21 million from nine deals).

Over the next few years, we can expect these city’s commercial real estate sector to be the main beneficiaries of the booming life sciences sector.

The New Program Dedicated to Keeping Mississippi at the Forefront of Technology

The path toward enhanced opportunities and economic growth in Mississippi’s private sector begins in secondary and elementary education, then continues through the workforce training abilities of the state’s astounding community college system and on to the Research and Development (R&D) prowess of the higher education system.

Taking advantage of this clear opportunity, Mississippi’s state education officials and C Spire executives launched a brand new program on October 17th, 2018. This new program, called the C Spire Software Development Pathway is a public-private partnership formed by C Spire and the Mississippi State University Research and Curriculum Unit’s (RCU) new Center for Cyber Education.

The movement will aid in Mississippi’s aggressive goal of creating and delivering a standardized computer science programme for approximately 500,000 scholars from grade K-12, and also place trained computer science professors in all of the state’s 850+ middle, elementary, and high schools by 2024.

State education officials and C Spire estimated that C Spire Software Development Pathway will deliver approximately 90 percent more Mississippi graduates who are qualified for entry-level software development positions compared to all other existing programs. This will further help narrow down the skills gap for this profession in Mississippi and the United States in general.

Currently, there is a shortage of computer science experts, both nationwide and in-state. According to Code.org, Mississippi had more than 900 open jobs with only around 140 computer science graduates in the state per year. Across the country, there are currently more than 500,000 open jobs, and a recent study indicated that the shortage of software developers will grow to more than 1 million by 2020.

It is our hope that this new innovative partnership will grow to become an educational template for the workforce and education system as Mississippi’s private and public sectors build a stronger alliance to forge a sturdier economic environment for this generation of workers and students as well as those who will follow them.

New Mayo Clinic – ASU Accelerator Program To Spark Medtech Startups

According to a recent report released by Evaluate, the number of medtech startups hit a new low of 196 in 2018. The number has been declining over the last couple of years but it’s the first time in more than a decade the figure has gone below 200.

Surprisingly, however, the total amount invested in medtechs has been holding steady, thanks to big companies such as Grail, Helix, and Alphabet’s Verily. In fact, Verily’s recent investment of $1 billion in the industry signifies 2019 will leave 2018 in the dust in terms of the total amount invested in medtechs.

The new financing trend implies that investors have opted to make fewer, but bigger investments, which has enabled big companies like Helix to undertake ambitious R&D programs whereas small startups are left out in the cold.

That said, Mayo Clinic and Arizona State University think they may have a solution for this unpleasant situation. The duo has come up with a six-month accelerator program that is aimed at creating investment opportunities for medtech startups.

Throughout the program, medtech startups will have access to Mayo Clinic’s medical experts, investors, and other individuals who can validate, refine, and finance their technologies.

There is a catch, however. To qualify for the program, a medtech startup ought to have already generated $500,000 as seed capital. In addition to that, each startup that qualifies to join the program will pay a fee of $50,000.

The program will take place at Mayo Clinic’s Campus in Arizona, and its goal is to ensure that in those six months, each startup that joins the movement is in a better position to raise money and accelerate product development.

Whether this program will be beneficial or effective remains unknown. But the institutions are already recruiting the 1st batch of participants who’ll join the program by April, so we’ll find out in due time.

Fish 2.0 Event For Aquaculture Innovators – Feb 2019

Investors, experts and seafood industry leaders will meet for the Fish 2.0 networking event on February 12-13, 2019. The session will be held at the Thad Cochran Marine Aquaculture Center at the University of Southern Mississippi and will discuss US Gulf Coast and Midwest aquaculture.

Over 20 pitches from local aquaculture businesses will take place and participants will be able to tour the center, which provides an opportunity to see advanced technologies and discuss pressing issues in the industry.

Fish 2.0 aims to provide local businesses with tools and networking opportunities to grow. Director Kelly Lucas states that, “Marine aquaculture is growing, and advances in techniques, gear, automation and products occur in a moment’s notice. Connecting entrepreneurs and investors helps get these developments into the marketplace.”

Aquaculture is vital to the US in terms of seafood production, creating jobs and developing sustainable practices. Shellfish and finfish producers in particular are quickly expanding in the region.

The event is free to attend. Registrations must be completed online.

How Autonomous Vehicles Are Poised to Change the Future

The world is changing and the revolution in the automotive industry is happening. We are expected to have 10 million self-driving cars on the roads by 2020. In fact, large automotive firms such as Volvo, Ford, and Tesla have already launched their first wave of autonomous vehicles.

But what are the anticipated implications of the self-driving technology on the industry?

A study carried out by Intel showed that, thanks to this exceptional transformation of the global industry, autonomous cars are projected to displace human drivers and generate around $7 Trillion per annum by 2050.

The study predicted autonomous cars will result in a massive economic trajectory that will grow from $800 billion per year in 2035 to $7 trillion per year in 2050, taking into account the cost of all products and services resulting from fully autonomous cars, including indirect savings, like time.

That said, before we can close in on the 2035 to 2050 economic trajectory, the US Department of Transportation stated that firms in the United States alone are expected to spend approximately $61 billion in Capital investments and Research and Development (R&D) on autonomous vehicles by 2023.

According to stratistics MRC, the Global Automotive Safety System market was valued at $82.8 billion in 2017, but thanks to the expected R&D and Capital Investments spending, the market is anticipated to reach almost $200 billion by 2026 growing at a Compound Annual Growth Rate (CAGR) of 10%.

The federal budget also contained a significant resource. A spending bill that was unveiled ten months ago included $100 million for a highly automated “vehicle R&D” program, and includes funding for evaluating the employment impact of self-driving vehicles.

The funding also included $60 million for grants that’ll fund demo projects that test safety and feasibility of self-driving cars.

In fact, other than the Return on Investment in real dollars, all companies investing in autonomous vehicles are in it for another reason; safety. The WHO estimated that 1.35 individuals die each year due to road traffic related crashes around the world.

Add that number to the 20 – 50 million others who suffer non-fatal harms that leave them disabled for life.

Intel forecasted that autonomous cars will save more than 580,000 lives between 2035 and 2045.

It’s no wonder nearly 55% of the 175 Merger and Acquisition deals done over the last two years were related to electric and automated vehicles.

Seed Innovation Crucial For Future Food Production

Seed innovation can result in better food production from the same amount of land while also helping to tackle global sustainability and health issues. With an estimated population of 9 billion people by 2050, sustainability and increased yield are crucial goals for agricultural R&D projects. Crop improvements can benefit the environment through decreased energy use, greenhouse gas emissions, irrigation, soil erosion and land use.

Increased knowledge in plant genomics and bioinformatics is allowing for advanced plant breeding and crop improvement. Innovations include pest and disease solutions, increased plant tolerance to particular environments, higher yields and higher quality crops. Drought and flood resistant crops are in strong demand, with farmers experiencing the enhanced effects from global warming.

Furthermore, consumers are favouring fewer chemicals, more nutrition, fresher fruit and vegetables and a longer shelf life. Longer shelf life results in less waste, the retention of more nutritional content and better tasting food. Examples of seed innovation that you may be familiar with include seedless watermelon, baby broccoli, snack-sized peppers and tear-less onions.

The development of new varieties of plants involves a lot of work, requiring breeding, seed selection, trials, land, facilities and more. The project can cost around a million dollars a year and often takes between seven to ten years. To make the investment worthwhile, many breeders are applying for intellectual property rights for their innovations.

If your company is participating in seed innovation, you are likely eligible for the R&D tax credit, which can reduce your tax bill. Contact us for an eligibility assessment.